United States District Court, D. Delaware
OFFICE DEPOT, INC., and NORTH AMERICAN CARD AND COUPON SERVICES, LLC, Plaintiffs,
THOMAS COOK, in his capacity as the Secretary of Finance for the State of Delaware; DAVID M. GREGOR, in his capacity as the Delaware State Escheator; and MICHELLE M. WHITAKER in her capacity as the Delaware Abandoned Property Audit Manager, Defendants.
E. Hutz, R. Eric Hutz, REED SMITH LLP, Wilmington, DE Diane
Green-Kelly, REED SMITH LLP, Chicago, IL Attorneys for
Jennifer R. Noel, Caroline Lee Cross, Delaware Department of
Justice, Wilmington, DE Attorneys for Defendants.
Rosenthal, Tiffany R. Moseley, J.D. Taliaferro, LOEB &
LOEB LLP, Washington, DC Marc S. Cohen, LOEB & LOEB LLP,
Los Angeles, CA Attorneys for Defendant Thomas Cook.
U.S. DISTRICT JUDGE.
18, 2016, Plaintiffs Office Depot, Inc. ("Office
Depot") and North American Card and Coupon Services, LLC
("NACCS" and, collectively, "Plaintiffs")
filed a complaint ("Complaint") against Defendants
Thomas Cook ("Cook"), in his capacity as the
Secretary of Finance for the State of Delaware; David M.
Gregor ("Gregor"), in his capacity as the State
Escheator of the State of Delaware; and Michelle M. Whitaker,
in her capacity as the Audit Manager for the State of
Delaware ("Whitaker" and, collectively,
"Defendants"). (D.I. 1) The Complaint alleges that
Delaware's Unclaimed Property Law, Del. Code Ann. tit.
12, § 1101 (2016) ("DUPL"), "violates and
is preempted by federal common law." (Id.
¶¶ 1, 76) It further alleges that Defendants'
actions pursuant to the DUPL have violated Plaintiffs'
rights under the Fourth Amendment to the United States
Constitution. (See Id. ¶¶ 1, 89)
October 28, 2016, Defendants filed a motion to dismiss
Plaintiffs' Complaint for lack of subject matter
jurisdiction and for failure to state a claim
("Motion"). (D.I. 22) Briefing on Defendants'
Motion was completed on December 9, 2016. (D.I. 23, 24, 26)
reasons that follow, the Court will grant Defendants'
is a procedure through which "a sovereign may acquire
title to abandoned property if after a number of years no
rightful owner appears." Texas v. New Jersey,
379 U.S. 674, 675 (1965). Delaware's escheat law
authorizes the State Escheator to claim unclaimed property
and to conduct examinations of companies' books and
records. See generally Del. Code Ann. tit. 12,
Office Depot is a corporation organized under Delaware law,
and Plaintiff NACCS is a limited liability company organized
under Virginia law. (See D.I. 1 ¶¶ 5-6)
Office Depot and NACCS are parties to a Gift Card, Gift
Certificate, and Merchandise Credit Agreement, pursuant to
which "NACCS appointed Office Depot as an agent... to
promote and sell NACCS's gift cards, gift certificates,
and merchandise credits using trademarks and trade names
owned by Office Depot in exchange for a 1% commission."
(Id. ¶ 36) Office Depot and NACCS are also
parties to a Conveyance Agreement, under which NACCS has
"acquired the assets and assumed the liabilities of
Office Depot's gift card and gift certificate
business." (Id. ¶ 37)
February 6, 2013, Defendants began an audit of Office
Depot's compliance with Delaware's escheat law.
(See Id. ¶ 39) Using Kelmar Associates, LLC
("Kelmar"), an auditing firm, as their agent,
Defendants requested "voluminous detailed financial
records" for periods back to 1995 and also requested
"copies of unclaimed property reports filed in all
states for the entire audit period." (Id.
¶¶ 40, 45) Office Depot objected to producing
documents that predated the statute of limitations and to
producing "copies of unclaimed property filings in
states not participating in the examination."
(Id. ¶¶ 40, 45)
September 3, 2014, Kelmar asked NACCS to produce
"extensive detailed information ... relat[ing] to
NACCS's gift card, gift certificate, and merchandise
credit business." (Id. ¶ 43)
"Plaintiffs responded by producing ... NACCS's
[l]imited [l]iability [a]greement to demonstrate that
NACCS" was organized in Virginia and further produced
all of NACCS's general ledger accounts. (Id.
¶44) On September 15, 2015, Kelmar again requested
"voluminous detailed information concerning NACCS's
gift cards, gift certificates, and merchandise credits
business, ... irrespective of the card issuer" being
Office Depot, NACCS, or any other party. (Id. ¶
did not produce any documents pursuant to Kelmar's
September 15, 2015 request. (See Id. ¶ 50)
Thus, on January 26, 2016, Kelmar sent a letter'
to-Office Depot stating that "Office Depot's
continued failure to provide the requested information will
result in the Office referring the matter to the Attorney
General's Office for consideration of enforcement
action." (Id. (internal quotation marks
February 11, 2016, Defendant Whitaker "sent a letter to
Office Depot, listing several other documents that Office
Depot had not produced in the examination, including copies
of... unclaimed property reports filed in other states
for.... years 1995 and forward." (Id. ¶
55) In response, Plaintiffs' counsel sent a letter to
Whitaker, arguing that most of the information sought by
Defendants "concerns property for which Delaware lacks
standing to claim." (Id. ¶ 56)
Plaintiffs' letter further argued that most of
Defendants' requests were barred under the statute of
limitations. (See id.)
consequence of not submitting all of the documents Defendants
sought, Plaintiffs received an email from Kelmar on June 24,
2016, notifying Plaintiffs that "th[e] matter had been
referred to" the Attorney General's Office.
(Id. ¶ 57 (internal quotation marks omitted))
further allege: "The Delaware Attorney General is
currently prosecuting a lawsuit against eighty-six
defendants, including seventeen Delaware incorporated
companies, under the Delaware False Claims Act.. .seeking
treble damages and attorneys' fees and costs, for failure
of the Delaware incorporated entities to escheat unredeemed
gift cards issued by third- party special purposes entities
organized in other states." (D.I. 1 ...